What you’ve been asking us about resale royalty
May 8, 2019 | Visual Arts
The key questions we receive from artists are:
- When is a sale a resale? and
- When does royalty apply?
When is a sale a resale?
To answer this question, we often need to take a step back and talk about the first or primary sale from the artist and who they sell to, or through.
Where the artwork is being purchased outright by the person dealing with the artist, it’s straightforward. Regardless of who that person is – a gallery, a dealer, a collector or simply someone who will enjoy the work in their home – this sale is the primary sale. When that person sells the artwork, it is a resale.
What this primary sale – purchased outright – looks like:
- The artist is paid in full for the artwork, by the buyer on delivery (or sometimes in advance of delivery).
- The ownership of the artwork passes from artist to the buyer.
- There is no requirement for the person who bought the work to let the artist know when they resell it.
If an artist has a consignment arrangement with the person selling their art, for example a gallery or dealer, this person is acting as the agent for the artist in the sale and when the artwork is sold by the artist via the agent to a third party, that is the primary sale. In this situation, the resale occurs when the third party who purchased the work via the gallerist sells it.
What this primary sale – on consignment – looks like:
- On delivery, the artist receives documentation confirming they have delivered the work.
- The artist and agent (gallery/dealer) have agreed the sale price and the proportion each will receive when the work is sold.
- The artist is told when the work is sold to the third party and is paid at that time (note: they may have received a part payment in advance but this is not usual).
- The ownership of the artwork transfers from the artist to the third party (it does not transfer to the agent in between).
- The artist and agent will have a written agreement that details the above aspects of their arrangement.
There can be other ways in which an artwork sells. For example, two art market professionals (gallery/dealer) being involved in a sale. In this situation one may have purchased outright and the other is on consignment, or both have purchased outright. It’s important to note that the resale royalty right was created to ensure that when a work is transferred through several hands before it reaches the ultimate owner, the artist should benefit from a share of the increasing sales price in this journey. This is particularly relevant to Indigenous artists whose works are typically purchased outright and ownership may move through multiple galleries/dealers to reach the ultimate owner.
If you’d like more information on the various sales models and how to identify your primary sale versus a resale, please speak with our Visual Artists Manager, Tristan Chant or our Indigenous Engagement Manager, Stephanie Parkin.
When does a resale generate a royalty to the artist?
A resale generates a royalty if:
- the work resells for $1,000 (including GST) or more;
- the seller owned the artwork on or after 9 June 2010 (i.e. they acquired the artwork after the scheme commenced – acquiring can be by purchase, gift or inheritance);
- the resale is a commercial resale; that is, an art market professional (gallery, dealer, auction house, retailer, etc.) is involved in the sale;
- the artist is an Australian citizen or resident;
- the artist is alive;
- if the artist has died, the resale falls within the term of copyright, that is within 70 years from the end of the year in which the artist died; and there is a beneficiary or estate with a connection to Australia.
Need more information?
The resale royalty team is available to assist artists, estates and art market professionals on 1800 066 844 or email@example.com